In today's globalized economy, understanding how to calculate foreign exchange rates is important for businesses and individuals who need to convert currencies. With over 180 currencies in use worldwide, accurately determining exchange rates is essential for investment, personal finance and other needs.

Fortunately, learning how to calculate foreign exchange rates is simpler than you might think. In this beginner-friendly guide, we'll break down the process step-by-step, to help you navigate currency conversion better.

What is Foreign Exchange?

Foreign Exchange (also called Forex/FX)  is simply the conversion of one country's currency to another country's currency. For instance, converting Euros to Naira, Dollars to Naira, Naira to Cedis, and so on with other currencies.  

Foreign Exchange is done at a specific rate that is referred to as the Foreign Exchange rate. Demand and Supply are the market forces that drive conversion rates. For this reason, conversion rates are floating regularly. Foreign Exchange activities are done 24 hours a day, 5 days a week with weekends excluded. In terms of volume, the Foreign Exchange market is the largest. It is also the most liquid market in the whole world.

Several factors affect foreign exchange. One major factor is inflation. Inflation not only affects the currency of a country; it also affects its foreign exchange with other currencies. Another factor that can affect foreign exchange rates is interest rates. Low interest rates will lead to what is called consumer spending, and also economic growth. 

As much as there are so many currencies in the world, there are some that are more traded than others. They include the: US Dollar, Japanese Yen, British Pound, and Australian Dollar.

A Simple Guide to Calculating Foreign Exchange Rates

Calculating foreign exchange rates may be different at first. This is because it involves currency conversion, which tends to be tricky from the beginning. Note that getting correct and up-to-date information on these rates is very paramount and will prevent you from losing money. 

• Find out the exchange rate of the country you are converting to. You can find it online, in banks, currency exchange shops, etc. You can also find this information at airports. Make sure you have the most up-to-date information about the country's exchange rate. Not having the correct information can cost you money, time, and energy.

For the latest foreign exchange rates, visit: https://www.ohentpay.com/currency-converter/gbp-to-ngn-rate

• Then divide your current currency by the exchange rate you just found out. For instance, if the Euro/USD exchange rate is 0.919 and you want to convert 500 euros to USD. All you need to do is multiply 500 by the 0.919 exchange rate, giving you 459.5 USD. 

How to Calculate Foreign Exchange Rates on OhentPay

One of the easiest, fastest, and most accurate ways to calculate foreign exchange rates is by using a FinTech platform, which offers this feature. OhentPay is one of the FinTech platforms that allows you to send money to over 190 countries and also exchange currencies at the same time.

Here is a simple guide on how to calculate foreign exchange rates on OhentPay:

• Download the OhentPay app: While you can also use the website, using the app is an easier option. You will find the app on your Google App Store or iOS store.
• Create an account/log in: If you do not already have an OhentPay account, click on ‘Create an Account’. The account creation process takes only two minutes for you to get verified. All you need to do is follow the prompts and input the correct information when asked. 
• Add currencies: Add the currencies you want to change to, and from. Do this by clicking the currency logo beside ‘Total Balance’. It takes you to another page where you see a ‘plus’ button. 

Click that and add as many currencies as you wish. OhentPay supports over 40 currencies, so you have a lot of options to choose from. 

• Click the ‘Exchange’ button: This is right under the ‘Total Balance' section.
• Select currencies and input an amount: The next thing to do is select the currency you are exchanging from, as well as the currency you are exchanging to. Click the two currency logos you can find and do this selection.

Wrapping Up

Calculating Foreign Exchange rates doesn't have to be a chore. As tricky as it may seem, having the right knowledge on how to calculate it, is a game changer for anyone. Some people are scared when it comes to calculating things like exchange rates. But you shouldn't be scared when there is an article like this one.

If you’d like to send money anywhere to over 190+ countries and you prefer fast transfers at great rates, we recommend the OhentPay money transfer service. Create an account here to get started.

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